Finance Minister Nirmala Sitharaman on Wednesday said that the employee provident fund contribution will be 10% for both employees and employers as compared to the statutory obligation of 12%. This reduction will be applicable for the next three months.
Businesses welcomed the move stating that it will help increase the take home pay for employees and put more money in their hand. It will also reduce the cost for employers, they said.
The finance minister also announced an extension of an earlier scheme under which the government pays the EPF contribution of employees and employers. This scheme has been extended for another three months.
Under this scheme, the central government would pay 24% of the monthly wages into EPF accounts of employees who earn below ₹15,000 per month. But this is applicable only to employees who were working in units having upto one hundred employees. 90% of the employees of such units have to have a monthly earning below Rs15,000 to avail the benefit of the scheme. The scheme will now be available till August.
Nearly 3.6 lakh units and 72 lakh employees have benefited from this scheme, the finance minister said. The central government had launched this EPF contribution scheme on March 26 to help the economically weaker sections cope with the Covid19 pandemic.